• SWFs’ investments increase from $10bn in first half of 2009 to $50bn in second half
• Financial services sector accounts for less than a fifth of investments in 2009, down on 45% since start of decade
• Assets under management of SWFs fall 3% in 2009 to $3.8 trillion
Sovereign wealth funds (SWFs) gradually regained their appetite for foreign investments in 2009 having cut-back on cross-border spending for much of 2008 according to International Financial Services London (IFSL), the independent organisation promoting UK financial services worldwide.
IFSL’s report Sovereign Wealth Funds 2010 shows that the $10bn invested by SWFs in the first half of 2009 was the slowest start to a year since 2005. Activity picked up in the second half, and much of the $50bn invested during this period was in foreign markets, primarily Europe and North America. The financial services sector accounted for less than a fifth of investments in 2009, down on its 45% share seen since the start of the decade. Instead, a larger proportion of funds was allocated to industry, commodities, real estate and other non-financial sectors. The China Investment Corporation was particularly active during the year with $15bn invested internationally.
Assets under management of sovereign wealth funds fell by 3% in 2009 to $3.8 trillion according to IFSL. The underlying value of SWFs’ portfolios probably increased by 15% in 2009 if negative positions on equity market investments at the end of the previous year are taken into account. There was an additional $6.5 trillion held in other sovereign investment vehicles, such as pension reserve funds, development funds and state-owned corporations’ funds and $6.1 trillion in other official foreign exchange reserves. IFSL projections are for SWFs’ assets to increase to $5.5 trillion by the end of 2012.
Countries with SWFs funded by commodities’ exports, primarily oil and gas exports, totalled $2.5 trillion at the end of 2009. Non-commodity SWFs totalled $1.3 trillion and are projected to increase their 34% share of assets in 2009 to 38% by 2012. Non-commodity SWFs are typically funded by transfer of assets from official foreign exchange reserves, and in some cases from government budget surpluses and privatisation revenue. Asian countries account for the bulk of such funds.
Marko Maslakovic, Senior Economist at IFSL said: “London is an important centre for SWFs both as a clearing house for transactions and a location from which some funds are managed. A number of funds from Kuwait, Brunei, Singapore and United Arab Emirates have already set up representative offices in London. The UK’s open and competitive market for international investment puts London in pole position to capture a growing share of this market over the coming years.”
Click here to view PDF of Sovereign Wealth Funds 2010 report
• Financial services sector accounts for less than a fifth of investments in 2009, down on 45% since start of decade
• Assets under management of SWFs fall 3% in 2009 to $3.8 trillion
Sovereign wealth funds (SWFs) gradually regained their appetite for foreign investments in 2009 having cut-back on cross-border spending for much of 2008 according to International Financial Services London (IFSL), the independent organisation promoting UK financial services worldwide.
IFSL’s report Sovereign Wealth Funds 2010 shows that the $10bn invested by SWFs in the first half of 2009 was the slowest start to a year since 2005. Activity picked up in the second half, and much of the $50bn invested during this period was in foreign markets, primarily Europe and North America. The financial services sector accounted for less than a fifth of investments in 2009, down on its 45% share seen since the start of the decade. Instead, a larger proportion of funds was allocated to industry, commodities, real estate and other non-financial sectors. The China Investment Corporation was particularly active during the year with $15bn invested internationally.
Assets under management of sovereign wealth funds fell by 3% in 2009 to $3.8 trillion according to IFSL. The underlying value of SWFs’ portfolios probably increased by 15% in 2009 if negative positions on equity market investments at the end of the previous year are taken into account. There was an additional $6.5 trillion held in other sovereign investment vehicles, such as pension reserve funds, development funds and state-owned corporations’ funds and $6.1 trillion in other official foreign exchange reserves. IFSL projections are for SWFs’ assets to increase to $5.5 trillion by the end of 2012.
Countries with SWFs funded by commodities’ exports, primarily oil and gas exports, totalled $2.5 trillion at the end of 2009. Non-commodity SWFs totalled $1.3 trillion and are projected to increase their 34% share of assets in 2009 to 38% by 2012. Non-commodity SWFs are typically funded by transfer of assets from official foreign exchange reserves, and in some cases from government budget surpluses and privatisation revenue. Asian countries account for the bulk of such funds.
Marko Maslakovic, Senior Economist at IFSL said: “London is an important centre for SWFs both as a clearing house for transactions and a location from which some funds are managed. A number of funds from Kuwait, Brunei, Singapore and United Arab Emirates have already set up representative offices in London. The UK’s open and competitive market for international investment puts London in pole position to capture a growing share of this market over the coming years.”
Click here to view PDF of Sovereign Wealth Funds 2010 report
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